Zojila project costs soar as IL&FS arm contract fails

Economy


The road transport and highways ministry is expected to soon approve the upward revision of total project expenditure on the Zojila tunnel in Jammu and Kashmir by about a fourth to nearly ₹8,400 crore, said people with knowledge of the matter.

This comes months after termination of the contract with IL&FS Transportation Network, the road development arm of the crisis-hit Infrastructure Leasing & Financial Services.

An official told ET that the estimated project cost, the contract for which has been cancelled for the second time in two years, had to be revised to reflect the increase in expenses over time. “The earlier estimate of ₹6,800 crore was an old one. Now, two years have passed. So (implementing agency) National Highways and Infrastructure Development Corporation (NHIDCL) has updated the estimate. It has already gone to the road transport and highways ministry, while the revised cost committee approved it earlier this week,” said the official, who did not wish to be identified.

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The official said NHIDCL has extended the deadline for filing bids to July 9, from June 26, since revised cost for the 14.2-km long tunnel is yet to receive the ministry’s final nod. The final project cost is expected to be approved within a week, the official said.

In January, NHIDCL, which is responsible for building highways in hill states and the Northeast, terminated the contract bagged by IL&FS for constructing what will be Asia’s longest tunnel. In March, it invited fresh bids for the struggling project.

The tunnel project is of strategic importance since it will provide all-weather connectivity between Srinagar and Leh while the current National Highway that connects the two remains shut for nearly six months due to snowfall.

IL&FS had beaten Larsen & Toubro, Reliance Infrastructure and Jaiprakash Ventures in January 2018 to bag the contract on engineering, construction and procurement basis.

The government had made four attempts since 2013 to invite bids under the public-private partnership model, but got poor response.

Z-MORH TUNNEL

NHIDCL has invited fresh bids for the ZMorh tunnel project, which will provide all-weather connectivity between Srinagar and Kargil.

Work on the project, which was also bagged by IL&FS, has been stuck since July 2018, and NHIDCL is now in the process of resolving it based on guidelines issued by the highways ministry in March. The corporation is meeting IL&FS officials twice a week to agree to the terms of foreclosure of the contract, said officials. “We are hoping to close the process in a week,” said another official.

According to guidelines, NHIDCL will pay IL&FS for the “value of work done.” The official said, “We have estimated this amount at around ₹430 crore while IL&FS has given an estimate of around ₹800 crore. But we are confident that we will wind up with around 10% more than our estimation.”



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